Based in New York, FuboTV (NYSE:FUBO) is a virtual content provider with a sports streaming and betting angle. Even if you feel that this is a high-conviction niche market, FUBO stock isn’t the best investment as the company’s results are subpar.
Without a doubt, sports streaming and wagering became red-hot markets during the Covid-19 lockdowns of 2020. Fast-forward to mid-2022, however, and businesses in this segment have to prove their viability. After all, the lockdowns have largely been lifted in the U.S. Also, investors might wonder whether FuboTV’s business can survive amid persistently high inflation.
As usual, the answer lies within the hard data. What we’ll discover is that FuboTV’s financial issues are considerable and, like it or not, some analysts have downbeat expectations for the company’s stock.
What’s Happening with FUBO Stock?
Many stocks have lost value since November of last year — there’s no denying it. Yet, it is not reasonable to just blame overall market weakness for FuboTV’s problems.
Shockingly, FUBO stock declined from $33 in November 2021 to less than $3 in mid-2022. Bearish sentiment in the broader stock market couldn’t possibly be the only reason that FuboTV shares fell as far as they did.
As the stock continues to plummet to new lows, investors should consider how much further it could fall this year. One stark warning from the company itself should be enough to keep jittery traders away.
In a Form 10-Q, FuboTV admitted, “Since inception, the Company’s operations have been financed primarily through the sale of equity and debt securities.” Of course, issuing shares can dilute their value. Moreover, debt can provide a quick capital infusion, but it typically must be repaid with interest.
But Wait, it Gets Worse
Then, FuboTV acknowledged that it “has incurred losses from operations and negative cash flows from operating activities since inception and expects to continue to incur substantial losses.” If that’s not a huge red flag, then what would be?
Let’s see if we can quantify FuboTV’s “substantial losses.” During 2022’s first quarter (Q1), the company incurred a net earnings loss of roughly $141 million. That’s approximately double FuboTV’s prior-year period net loss of around $70.19 million.
To view it from a different angle, FuboTV sustained a loss of 89 cents per share in Q1 2022. Analysts had expected the company to post a per-share loss of 63 cents. In the year-ago quarter, the loss was already a worrisome 59 cents per share. Clearly, FuboTV’s bottom-line results aren’t showing any progress.
Thus, it’s perfectly reasonable for some experts on Wall Street to lower their expectations regarding FUBO stock. For example, Needham analyst Laura Martin lowered her price target on the stock from $15 to $5. Meanwhile, Roth Capital analyst Darren Aftahi slashed his price target from $7.50 to $4.25. JPMorgan (NYSE:JPM) analyst Philip Cusick reportedly didn’t issue a price target, but downgraded FuboTV to from “neutral” to “underweight.”
What You Can Do With FUBO Stock
Sports betting can be exciting and perhaps it’s a high-conviction market segment for the 2020s. Yet, without the catalyst of Covid-19 lockdowns from a couple of years ago, FuboTV seems to have worsening financial issues.
Not only is the company not profitable, but FuboTV’s net earnings loss is widening quickly. Consequently, it’s understandable that some analysts have low expectations for FUBO stock. The takeaway, then, is that investors should stay cautious and maintain a hands-off strategy with this stock.
FuboTV currently earns a grade of “F” in my Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.